Files reveal AIG workers' anger at public, politicians

by Brady Dennis - Mar. 7, 2010 12:00 AMWashington Post

During the national furor that erupted last year after American International Group paid more than $165 million in bonuses, the voices of those vilified for receiving the payments remained silent, at least in public. But behind closed doors, employees at AIG's Financial Products division - the very unit whose trading had hastened the insurance giant's collapse - were defiant, claiming they were merely getting what they were due, recoiling at public accusations that they were behind their capitalizing on the company's massive taxpayer bailout.

"I will stand behind every action I have taken in this company from day one," one employee said, according to a newly obtained transcript of a conference call the division's head held last March with some of his staff.

But when another employee asked whether the staff would be getting a second round of bonuses promised for March 2010, his colleagues burst into laughter.

Yet they did see that money, at least most of it. Earlier this month, under a deal in which employees agreed to take a cut in their upcoming retention bonuses in return for an accelerated payment, AIG paid out about $100 million to employees at the firm. This month, AIG is scheduled to pay the last of the bonuses.

Even so, neither time nor money has softened the employees' feelings of wrongful persecution and their anger over becoming the subjects of scorn and ridicule. Seldom was that sense of victimhood more clear or more visceral than in the conference call of March 23, 2009.

Gerry Pasciucco, who had been hired to wind down Financial Products after the AIG bailout, was in Wilton, Conn., broadcasting his image and his voice to shaken, frustrated and furious employees. He quickly encountered a buzz saw of complaints over demands that they forgo the bonuses they were due.

"I think it violates everything I believe in, and it's un-American," one employee complained that day, according to the transcript of the call.

The names of the staff members were redacted from the transcript obtained by the Washington Post.

The employees argued that the corporate leaders who had driven the firm into the ground were already gone from the company. Those who had remained behind to help clean up the mess and repay the taxpayer bailout were due their compensation, they urged Pasciucco.

"You made a commitment to us, and we made a commitment to you. And for anybody to look beyond that, as the politics and the media are at the moment, is missing the point," an employee said.

Another was even more irate, lashing out at the public for scapegoating AIG employees.

"To be honest with you, I really hope it blows up. I think the U.S. taxpayer deserves to lose a trillion dollars over this thing for the way they have behaved."

The AIG retention bonuses have rankled many in the public because the company has received a federal rescue package of about $180 billion in loans, stock investments and other commitments from the Federal Reserve and the Treasury Department. Closing down AIG Financial Products' trading portfolio has been vital to stemming further losses and repaying the public money.

As the employees were confronting Pasciucco last spring, lawmakers in Washington were contemplating a 90 percent tax on the bonus payments.

Pasciucco wanted to assuage their angst that day. But he also had another goal: persuading them to return 50 percent of the bonus money in hopes that New York Attorney General Andrew Cuomo would not make their names public, as he was threatening. Employees fumed, accusing Cuomo of "blackmail" and "extortion." They complained that they were being forced to pay "protection money."

Pasciucco agreed that the manner in which some Washington officials had responded to the furor was despicable.

Still, he tried to offer a dose of realism. The retention payments might have been guaranteed by contract, he said, but Financial Products had made bad bets that cost taxpayers billions of dollars. While the decision to return part of their money was voluntary, he said, such a pledge might help employees defuse some of the public anger.